How to Write Essay on Costco’s Marketing Strategy and Chain Management

Are you a business or marketing student who has been assigned to write an essay explaining Costco’s marketing efforts and supply chain management? What type of approach do you need to follow while writing Costco essays?

It can be the most thrilling experience to work on such a successful retailer to write a paper, but with the right approach. A student must collect authentic and up-to-date information to back their arguments in the essay with solid references. According to Britannica, Costco has been one of the largest warehouse retailers in the world for years, offering services to members only. A person can’t buy products in bulk at a discounted price if they don’t pay the annual membership fee.

Adding such stats and references is essential in your essay about Costco. In this detailed guide, we will share some untold tips to explain the marketing strategy and supply chain management in a paper. Let’s learn about them to make your essay impressive so that you can leapfrog your classmates.

6 Tips to Write an Essay on Costco’s Marketing Strategy and Supply Chain Management

Costco has employed a warehouse club model for its customers, and it is extremely popular in the United States. According to Investopedia, Costco operated 857 retail stores in the USA and North America in 2023, with a membership of around 124.7 million. Due to its connectivity and care for customers, students are often asked to write an essay on Costco, enabling them to understand how this unique idea became one of the largest stores in the world.

Students usually explain marketing strategies and supply chain management in their essays, as this is the most popular academic topic. However, writing on this topic is a continuous battle that you need to focus on for several days to succeed.  Most students don’t know what to include and exclude while writing such essays, and leave room for argumentative and structural mistakes. Professional essay writing services assist learners in this regard, helping them collect data to support arguments with references. These services effectively include the data related to marketing and supply chain strategies to make your essay more convincing.

Now, we will discuss some important tips to help you write a winning essay on Costco marketing strategy and supply chain management

1.    Membership-Based Model

A membership or subscription-based business model is one of the most important features of Costco. Instead of targeting every individual, it only pays attention to those who are willing to buy its annual subscription. Costco was among the pioneers that started this model in retail stores. This idea is now gaining popularity across multiple sectors.

The Forbes Council states that subscription-based models are resilient and follow a customer-centric approach. That’s why this idea worked perfectly for Costco because it focuses on loyal customers, retaining them for years. As buyers, we always want to avoid new brands, whether purchasing clothes or electronic items. Instead, we select a brand or store and remain loyal to it for years.

Costco serves only its loyal customers and sells them products at a discounted price. These customers don’t need to see promotional advertisement campaigns on Google or social media platforms. They just visit the local store and buy whatever they want to purchase in bulk. Here’s how this model works perfectly for Costco:

• This retail store doesn’t need to spend millions on online and offline advertisements to attract new clients. Rather, its loyal customers are its backbone.
• It can easily collect data about user behaviour and customise its supply chain management strategies for future success.
• If Costco doesn’t opt for promotional campaigns for years, it will not see a decline in its revenue because the loyal customers will give it repetitive business.

2.    Word-of-Mouth Marketing

You will see brands, whether online or offline, that spend millions of dollars annually on their promotions. Over the years, the cost of advertising has increased significantly, including PPC, Facebook marketing, and promotional ads on YouTube. On the other hand, there are brands and retail stores that don’t spend a penny on advertising; instead, they generate business through the word-of-mouth marketing model.

According to the Digital Marketing Institute, word-of-mouth marketing does not require brands to spend on advertising because consumers share information with others organically. Costco realised it several years ago and focused on ensuring customer satisfaction so that they become ambassadors for their retail stores. This marketing strategy enables buyers to perceive this brand as value-driven.

Let’s learn about how this strategy works so that you can include it in your Costco college essay:

• When brands spend thousands of dollars on advertising, they usually try to recover the cost by increasing the price of their products. However, this retail store doesn’t run these campaigns and sell products without breaking the bank. That’s why customers keep coming back again and again.
• People perceive those brands or stores as value-driven that offer discounts to their customers. And that’s what Costco does every day, week, and year. It offers discounted prices and makes customers loyal.

3.    Private Label Brand

When you write a college essay about Costco, you must mention its private label brand: Kirkland Signature. This brand has become a game changer for these stores because they are now better able to manage supply and chain. People consider Kirkland Signature as a cheaper alternative that not only sells products at a lower price but also doesn’t compromise quality.

This brand brings multiple benefits for Costco, and you can highlight them when working on your essay or reading a book for maximum understanding:

• Kirkland Signature allows Costco to achieve higher profit margins because the products are unique, and customers love to buy them in bulk from a retail store.
• Since Kirkland Signature is a part of this retail store, it can easily manage the production and quality of products. Based on the real-time data from customers, it produces items and enhances their quality.
• This association increases brand loyalty as customers can buy a whole lot of products, from protein bars to multivitamins.

4.    Smart Pricing

Let’s be honest! We all want to buy products that are cheap and are made from high-quality materials. There are two products, “A” and “B”. Their quality is the same; however, the manufacturers and prices are different. The price of “A” is $20, and you can buy “B” for $30. What product will you choose? We are sure you will opt for “A” like everyone else.

Costco knows it perfectly, that’s why its prices are lower than those of other brands and stores. This can become the strongest point of your famous Costco essay. It will show your instructor that you studied the price structure of these retail stores and compared it with other brands and branches. Here is how smart pricing helps Costco remain ahead of the competition:

• When the prices are low, people always try to purchase in bulk. This significantly increases the sales margin of these stores in various parts of the world.
• It builds long-term relationships with customers because they always tend to prefer items from stores that give them a discount on every product, from clothes to electronic gadgets.
• Costco does not involve itself in price wars with competitors as its benefit margin is very thin, giving no chance to others to come near it.

5.    Less is More

A lot of options always confuse customers. They usually explore every product before making a decision. On the other hand, if they see a limited stock, they will hurriedly buy a product without thinking about it twice. Costco understand this psychology and doesn’t let customers face issues when selecting a product. As per ICSC, it has only around 3700 SKUS (Stock Keeping Units).

Costco is capitalising on this strategy year-round and engaging more customers. Here’s how this approach helps this retail store to generate business easily:

• When customers make quick decisions, they tend to buy more products in one go. If they are presented with many options, they will spend time choosing a specific product instead of making purchases.
• When there are fewer products or items in a store, it will allow the store to reduce operational costs, resulting in high-profit margins.
• This strategy helps Costco to make better deals with manufacturers and dealers, meaning it will buy products at a lower price and sell them accordingly.

6.    Efficient Supply Chain Management

Costco is a famous retail store that efficiently manages its supply chain. From sourcing to distribution, it focuses on ensuring a smooth transition. This efficiency makes it a trusted choice for over 120 million people around the world. The following are some practices that Costco adopts regularly to ensure efficient supply chain management:

• Cross-docking: It eliminates the need for warehouse storage by transferring goods from inbound to outbound transportation.
• Continuous Integration: Costco has direct relationships with manufacturers and dealers, allowing it to buy cheap products and reduce the hassle of middlemen.
• Bulk Purchasing: This retail store always purchases products in bulk, which enables it to buy them cost-effectively.

What Is the Marketing Strategy of Costco?

The marketing strategy of Costco is rooted in customer loyalty and minimal advertising. Instead of running PPC campaigns and targeting customers on social media platforms, it leverages its membership-based model. This allows it to create a sense of commitment and exclusivity. Moreover, it offers a limited selection of high-quality products at a lower price.

Costco always focus on ensuring customer satisfaction and word-of-mouth marketing. Its marketing strategies emphasise simplicity, efficiency and value. Undoubtedly, Costco follows an untraditional marketing approach, and that has become the key to its success over the years.

What Is Costco’s Supply Chain Strategy?

Costco follows an efficient supply chain strategy and buys products in bulk. It always keeps SKUS in limited numbers to create a sense of urgency. From minimising storage hassle to reducing handling costs, it quickly moves products from suppliers to shelves. As mentioned earlier, Costco buys products in bulk from dealers and manufacturers to sell at a lower price.

It sustains long-term relationships with vendors and customers, maintaining consistency and trust. To ensure efficiency in supply chain management, it utilises the latest technology for real-time tracking and data analytics. All these measures ensure overall operational efficiency that supports its low-price promise.

What Is the Market Structure of Costco?

Costco works in an oligopolistic market structure in the wholesale and retail industry. An oligopolistic market is a market that is dominated by a small number of people or brands. Therefore, it competes with only a few stores, such as Walmart or Amazon. Costco has a strong hold over the market; however, it considers the actions of competitors when making strategic decisions.

Unlike eBay, Walmart, and Amazon, Costco is completely based on a membership model and limited product selection. This approach allows it to ensure low prices for a wide range of products, from clothes to electronic gadgets. The structure of Costco empowers it to maintain stable pricing and focus on long-term growth.

What Is Costco’s Competitive Advantage?

The competitive advantage of Costco lies in its cost-effectiveness, loyal membership base, and operational efficiency. By limiting the product variety, it reduces operational costs and gains better prices from suppliers. As mentioned above, Kirkland Signature is a private label of Costco that offers premium products at a lower price.

This model generates continuous revenue for it, encouraging customers to make repetitive visits. Additionally, it spends very little on advertising to ensure a reduction in costs. All these features have been a competitive advantage for Costco for years.

Wrapping Up

Don’t think writing a Costco essay is like curating a paper that includes arguments or describing a topic comprehensively. To write an essay on one of the largest retail stores in the USA, you will have to collect data from authentic sources and include references to back every claim or fact.

However, many students face difficulties here because they cannot find academic resources they can utilise as references in their essays. It may lead to structural flaws and uncited text in your paper. In that case, you can contact UK-based essay writing firms for expert assistance. These firms will back every claim or paragraph in your Costco essay with solid arguments, leading to higher academic grades.

Author Bio

Adria Hight is an experienced essay writer who started academic writing five years ago. Adria believes that she has been passionate about writing since her childhood. With a master’s degree in business and digital marketing, she writes essays about successful stores and franchises to help you earn better grades.